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East Coast Test Prep LLC v. Allnurses.Com, Inc.

United States District Court, D. Minnesota

April 4, 2019

EAST COAST TEST PREP, LLC, d/b/a Achieve Test Prep, and MARK OLYNYK, Plaintiffs,
v.
ALLNURSES.COM, INC.; ABC COMPANIES 1-10; John Does 1-10; DAVID R. SMITS, as Administrator of the Estate of Brian Short; LISA DUKES; JENNIFER MOELLER; and UHURA RUSS, Defendants.

          Charles S. Kramer, RIEZMAN BERGER, P.C., Richard L. Ravin, HARTMAN & WINNICKI, P.C., Robert A. Lengeling, BEITO & LENGELING, PA, and Thomas M. Beito, BEITO & LENGELING, PA, for plaintiffs.

          James J. Kretsch, Jr., and John D. Reddall, KRETSCH LAW OFFICE, PLLC, and Keith J. Miller and Justin T. Quinn, ROBINSON MILLER, LLC, for Defendants Allnurses.com, Inc., and David R. Smits.

          MEMORANDUM OPINION AND ORDER

          JOHN R. TUNHEIM CHIEF JUDGE

         Allnurses.com, Inc., and David R. Smits, as administrator of the Estate of Brian Short, (collectively “Defendants”) move for sanctions against Plaintiffs and for a protective order pursuant to Federal Rule of Civil Procedure 26(c). Defendants seek to allocate the costs associated with producing and storing electronically stored information (“ESI”) in response to a discovery request by Plaintiffs.

         The Court has before it a Report and Recommendation (“R&R”) of United States Magistrate Judge Elizabeth Cowan Wright recommending that Defendants' motion be denied, as well as Defendants' objections to the R&R. Also before the Court is Defendants' Motion for Review of Clerk's Action, in which Defendants seek the Court's review of costs denied by the Clerk.

         Because the Magistrate Judge did not clearly err in determining that Defendants' Motion for Sanctions and a Protective Order should be denied, the Court will overrule Defendants' objections, adopt the R&R, and deny the Motion. Additionally, since only some of the costs that Defendants seek to tax fit within the scope of what may be taxed by a prevailing party, Defendants' Motion for Review of Clerk's Action will be granted in part and denied in part.

         BACKGROUND

         Defendant Allnurses.com, Inc., hosts a website that “provid[es] a place where nurses can network, share, and learn from their peers.” (3d Am. Compl. ¶¶ 4, 39, Jan. 24, 2017, Docket No. 268.) Plaintiffs East Coast Test Prep, LLC, and Mark Olynyk brought an action for defamation, citing numerous posts on the website as well as certain actions and inaction of moderators and administrators of the site. (E.g. Id. ¶¶ 136, 139, 174.) The case was ultimately dismissed. (J., Aug. 10, 2018, Docket No. 451.)

         Defendants now seek to transfer to Plaintiffs the costs associated with producing and storing ESI related to Plaintiffs' Fifth Request for Production of Documents and Things (“Fifth Request”). (Mot. for Sanctions at 1-2, Aug. 24, 2018, Docket. No. 452.) In addition, Defendants move for sanctions against Plaintiffs' counsel for “excessive costs incurred based on the vexatious and unreasonable discovery requests” by Plaintiffs. (Id.) The Magistrate Judge recommends that Defendants' motion be denied. (R&R at 20, Dec. 11, 2018, Docket No. 490.) Defendants object. (Objs., Dec. 26, 2018, Docket No. 493.)

         Defendants also seek the Court's review of taxation of costs denied by the Clerk. (Mot. for Review of Taxation of Costs, Dec. 26, 2018, Docket No. 491.)

         I. FACTUAL BACKGROUND

         At the heart of this dispute is Plaintiffs' Fifth Request, which sought:

Any and all computers, servers, devices, network appliances, backups, ESI storage, or other information technology equipment and media (collectively “IT Equipment and Media”) (i) belonging to Brian Short, (ii) used by Brian Short at his home, or (iii) used by Brian Short to remotely access allnurses.com . . . . As used herein, (a) “device” includes without limitation, cell phones, smart phones, and tablets, (b) network appliances includes without limitation, routers (wireless or otherwise), and modems, and (c) “belonging to Brian Short” means belonging to Brian Short at or before the time of his death, even though the thing may now be owned by his estate or otherwise.

(Decl. of John Reddall (“Reddall Decl.”) ¶¶ 2-3 & Ex. A, Aug. 9, 2017, Docket No. 392.)

         Magistrate Judge Janie Mayeron specifically addressed the issue of allocating ESI production costs in a January 2016 order, which specified:

The producing party shall bear the cost of e-discovery. Nothing in this protocol, however, shall preclude a party from seeking to shift the costs of e-discovery during this proceeding or at the conclusion of this proceeding pursuant to Fed.R.Civ.P. 26 and 54 or 28 U.S.C. § 1920.

(ESI Protocol Order at 3, Jan. 12, 2016, Docket No. 89.)

         Plaintiffs sought information from the personal computers and devices of Brian Short, the founder and President of Allnurses.com, after they learned that Short had done work for Allnurses.com at home. (Decl. of Paul A. Grote (“Grote Decl.”) ¶¶ 10-14 & Ex. E at 10-11, Aug. 18, 2017, Docket No. 405; 3d Am. Compl. ¶ 5.) Short died on September 10, 2015, and his computers and devices were in the possession of Minnesota law enforcement officials. (Grote Decl. ¶¶ 5, 15.) The devices were returned to Short's estate around March 1, 2017. (Id.) When Plaintiffs learned that these computers and devices had been returned, they filed their Fifth Request. (Id. ¶ 16.)

         On the same day Plaintiffs filed the Fifth Request, they offered to send their own consultant to examine and create digital images of the information located on Short's computers and devices, but Defendants did not respond to this offer. (Id. ¶¶ 17-19.) In the meantime, Defendants consulted with Mark Lanterman of Computer Forensic Services (“CFS”) who advised that the only reliable method to mitigate risk of data loss or device failure was to make a forensically sound image of the computers and devices. (Reddall Decl. ¶ 6.)

         Following Lanterman's advice, Defendants provided CFS thirty-five devices on April 20, 2017, and asked CFS to forensically preserve, or “image, ” them. (Decl. of Mark Lanterman (“Lanterman Decl.”) ¶ 13, Aug. 9, 2017, Docket No. 391.) Imaging ensures that data cannot be altered during analysis. (Id. ¶¶ 10-11.) Of these thirty-five devices, eighteen were imaged. (Id. ¶ 13.) Imaging the devices cost Defendants $7, 150.00. (2d Decl. of John Reddall ¶ 2, Ex. A (“Invoice”) at 1, Aug. 24, 2018, Docket No. 454-1.) In addition to charging for imaging the devices, CFS also charges $2.50 per gigabyte per month to ...


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